Aoun Says Govt. Must Devise Plans for Debt and Restructuring of Banks

President Michel Aoun on Tuesday said the government must devise a plan to restructure debt, plans to restructure banks and the central bank and others for financial and administrative reform as well as economic and social affairs.

He said the plans must be laid out “in parallel with the negotiations with the Eurobond holders.”

Aoun voiced his remarks at the beginning of a Cabinet session in Baabda.

He had earlier met with Prime Minister Hassan Diab to discuss the latest developments. The session is dedicated to tackling the financial and monetary situation.

A ministerial source had told MTV that the Cabinet will discuss referring the Capital Control Law proposal to Parliament.

Diab announced Saturday that Lebanon “will seek to restructure its debts in a manner consistent with the national interest" through negotiations with creditors.

Diab said debt restructuring is part of a wider economic rescue plan that seeks to cut state spending and save more than $350 million annually.

The premier said Lebanon must now enter into debt restructuring negotiations, which "will take time, effort, and will require painful measures."

The default marks a new chapter in the country’s financial and economic crisis and could have severe repercussions on the tiny country, risking legal action by lenders that could further aggravate and push Lebanon's economy toward financial collapse. The currency has already lost up to 60% of its value on the dollar on the black market and banks have imposed crippling capital controls on cash withdrawals and transfers.

Lebanon has been suffering in recent years from a lack of economic growth, high unemployment and a drop in hard currency inflows from abroad. The financial crisis erupted amid nationwide protests over widespread corruption and decades of mismanagement by the ruling political class.